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Florida Government's Debt Declining Rapidly

Published: Tuesday, December 11, 2012 at 11:19 p.m.

Last Modified: Tuesday, December 11, 2012 at 11:19 p.m.

Florida government's debt is declining at a rapid rate — more than $2 billion in the last two years, a development that has meant plenty of good for the state, according to a report given to state officials Tuesday.

But the frugality also comes at a cost: less money to pay for school construction and maintenance and for what was once the nation's leading environmental land-buying program.

Since the end of Florida's 2010 budget year, state debt has plummeted from $28.2 billion to $26.2 billion. The debt dropped most precipitously in the last fiscal year — $1.5 billion — which was fully under Gov. Rick Scott's watch.

On the other hand, Florida has maintained its triple-A bond rating, which makes it cheaper to borrow money if the state needs it. The state's debt-to-cash ratio is improving — expected to fall below the benchmark level of 7 percent by the end of this year. Florida's financial reserves are getting healthy, too, projected to rise to $2.6 billion in the next six months, according to a report submitted to Scott and the Florida Cabinet.

“I think it's a real success story,” said Chief Financial Officer Jeff Atwater. “Debt is a tax on the people of Florida just as much as a tax.”

One of the ways Florida is curbing its debt load is by borrowing less. The state only borrowed $416 million in the last fiscal year — less than a quarter of the $2 billion in annual borrowing that the state averaged since 2002.

But the state's reluctance to borrow has had the biggest impact on the programs that historically have relied on state bonding.

They include school construction and maintenance — which represents 57 percent of the state's debt load — and the environmental land-buying initiatives, including Florida Forever, which account for 10 percent of the state's accumulated debt. Road construction is the other major debt generator at 27 percent.

University leaders have deemed the drop in construction and maintenance money — the bulk of which has traditionally come from Public Education Capital Outlay bonding — a “crisis.”

Five years ago, the university system received $650 million a year for facilities' needs, but it has dropped to $37 million in the current year, according to a draft report given to the state Board of Governors earlier this year.

The lack of building funds will hurt the university system's ability to meet many of Scott's goals, including affordability, the creation of more science and technology degrees and preparing students for the workforce, according to the report.

“Instead, at the present level of funding, we are going backwards,” the report said. “Florida's economy will lose out to more competitive states and countries, with better, more modern and functional university systems.

“This is not hyperbole — the list of needed repairs and life cycle maintenance at the 4,000 plus buildings in the system far exceeds what is budgeted and large-scale systemic failures will inevitably result over the coming years.”

The drop in PECO bonds is also having similar impacts in the state college and public school systems.

Environmental groups are lamenting the fact that the state has not issued any new land-buying bonds in the last three years, leaving a program that once had a $300 million annual budget with $8 million this year.

With the improving economy and the revival of state finances in the post-recession period, the environmental advocates are now urging the state to spend at least $100 million in the coming year to acquire environmentally critical lands. The groups have also begun collecting signatures for a constitutional initiative that they hope to place on the 2014 ballot, requiring the state to dedicate a certain amount of funding toward land purchases.

Eric Draper, executive director of Audubon Florida, said Florida will be paying off the last of a series of previous environmental bonds — called Preservation 2000 — in the coming year, freeing up a potential $250 million for annual land purchases.

“It's time to invest in land conservation,” Draper said. “That puts us in the perfect position to get back to protecting the places that make Florida special.”

But the Scott administration has not warmed to the environmentalists' proposal. The state Department of Environmental Protection has advanced a $50 million land-buying plan for the coming year — but it would be funded by the sale of “surplus” conservation lines, a plan that environmental groups have remained skeptical can be achieved.

Scott, who is preparing his 2013-14 budget request, said he wants “to take care of our environment.” But he said the biggest pressure on the budget remains the growth in the $22 billion Medicaid health care program for the poor and disabled.

“It doesn't leave a lot of extra money,” he said.

Scott also added that school funding was likely to be a higher priority. “I'm trying to follow the priorities of Florida families,” he said.

State Rep. Mark Pafford, D-West Palm Beach, said the unwillingness of the state to consider borrowing more money for future needs was shortsighted.

On environmental land purchases, Pafford said the state would likely find much lower land prices now rather than waiting. And he was skeptical of the plan to sell environmental land to buy other property.

“To me it's like a shell game,” he said. “You either do it, or you don't do it.”

Pafford also said with Florida's continued growth the need for school construction as well as setting aside land for parks and nature preserves will only grow.

“Florida, generally in our planning, we're constantly looking at our feet as opposed to the horizon,” he said. “There really is no plan.”

<p>Florida government's debt is declining at a rapid rate — more than $2 billion in the last two years, a development that has meant plenty of good for the state, according to a report given to state officials Tuesday.</p><p>But the frugality also comes at a cost: less money to pay for school construction and maintenance and for what was once the nation's leading environmental land-buying program.</p><p>Since the end of Florida's 2010 budget year, state debt has plummeted from $28.2 billion to $26.2 billion. The debt dropped most precipitously in the last fiscal year — $1.5 billion — which was fully under Gov. Rick Scott's watch.</p><p>On the other hand, Florida has maintained its triple-A bond rating, which makes it cheaper to borrow money if the state needs it. The state's debt-to-cash ratio is improving — expected to fall below the benchmark level of 7 percent by the end of this year. Florida's financial reserves are getting healthy, too, projected to rise to $2.6 billion in the next six months, according to a report submitted to Scott and the Florida Cabinet.</p><p>“I think it's a real success story,” said Chief Financial Officer Jeff Atwater. “Debt is a tax on the people of Florida just as much as a tax.”</p><p>One of the ways Florida is curbing its debt load is by borrowing less. The state only borrowed $416 million in the last fiscal year — less than a quarter of the $2 billion in annual borrowing that the state averaged since 2002.</p><p>But the state's reluctance to borrow has had the biggest impact on the programs that historically have relied on state bonding.</p><p>They include school construction and maintenance — which represents 57 percent of the state's debt load — and the environmental land-buying initiatives, including Florida Forever, which account for 10 percent of the state's accumulated debt. Road construction is the other major debt generator at 27 percent.</p><p>University leaders have deemed the drop in construction and maintenance money — the bulk of which has traditionally come from Public Education Capital Outlay bonding — a “crisis.”</p><p>Five years ago, the university system received $650 million a year for facilities' needs, but it has dropped to $37 million in the current year, according to a draft report given to the state Board of Governors earlier this year.</p><p>The lack of building funds will hurt the university system's ability to meet many of Scott's goals, including affordability, the creation of more science and technology degrees and preparing students for the workforce, according to the report.</p><p>“Instead, at the present level of funding, we are going backwards,” the report said. “Florida's economy will lose out to more competitive states and countries, with better, more modern and functional university systems.</p><p>“This is not hyperbole — the list of needed repairs and life cycle maintenance at the 4,000 plus buildings in the system far exceeds what is budgeted and large-scale systemic failures will inevitably result over the coming years.”</p><p>The drop in PECO bonds is also having similar impacts in the state college and public school systems.</p><p>Environmental groups are lamenting the fact that the state has not issued any new land-buying bonds in the last three years, leaving a program that once had a $300 million annual budget with $8 million this year.</p><p>With the improving economy and the revival of state finances in the post-recession period, the environmental advocates are now urging the state to spend at least $100 million in the coming year to acquire environmentally critical lands. The groups have also begun collecting signatures for a constitutional initiative that they hope to place on the 2014 ballot, requiring the state to dedicate a certain amount of funding toward land purchases.</p><p>Eric Draper, executive director of Audubon Florida, said Florida will be paying off the last of a series of previous environmental bonds — called Preservation 2000 — in the coming year, freeing up a potential $250 million for annual land purchases.</p><p>“It's time to invest in land conservation,” Draper said. “That puts us in the perfect position to get back to protecting the places that make Florida special.”</p><p>But the Scott administration has not warmed to the environmentalists' proposal. The state Department of Environmental Protection has advanced a $50 million land-buying plan for the coming year — but it would be funded by the sale of “surplus” conservation lines, a plan that environmental groups have remained skeptical can be achieved.</p><p>Scott, who is preparing his 2013-14 budget request, said he wants “to take care of our environment.” But he said the biggest pressure on the budget remains the growth in the $22 billion Medicaid health care program for the poor and disabled.</p><p>“It doesn't leave a lot of extra money,” he said.</p><p>Scott also added that school funding was likely to be a higher priority. “I'm trying to follow the priorities of Florida families,” he said.</p><p>State Rep. Mark Pafford, D-West Palm Beach, said the unwillingness of the state to consider borrowing more money for future needs was shortsighted.</p><p>On environmental land purchases, Pafford said the state would likely find much lower land prices now rather than waiting. And he was skeptical of the plan to sell environmental land to buy other property.</p><p>“To me it's like a shell game,” he said. “You either do it, or you don't do it.”</p><p>Pafford also said with Florida's continued growth the need for school construction as well as setting aside land for parks and nature preserves will only grow.</p><p>“Florida, generally in our planning, we're constantly looking at our feet as opposed to the horizon,” he said. “There really is no plan.”</p>